Cash is not disappearing. Your plastic card is.

LMAX Digital Volume, Stone Ridge Interval Bitcoin fund, Bitfury, Kraken, Brave, Bitfinex & Lightning and more

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Etienne Twitter,

🕵️ Cash is not disappearing. Your plastic card is.

He also says that cash is currently only about 8% of global money and that number has been going down steadily over the last fifty years as digital money has taken over - Andreas Antonopoulos in Fred Wilson Blog

People love to predict the end of cash but the reality is that payments are evolving and cash is still ruling. See below some high level notes.

  • The proliferation of mobile phones, contactless technology used in many debit and credit cards and services storing payment card digitally (e.g. PayPal, text message) make it easier than ever to pay for things. On top of this, cryptocurrencies like Bitcoin create new payment systems.

  • All of these drivers should make it clear that cash (ie notes and coins) are disappearing. However, the data says otherwise.

  • Based on the “Red Book” statistics, cash in circulation and card payments (a proxy for e-payments) have both increased between 2007 and 2016 . Only Russia and Sweden show evidence of substitution between cards and cash

  • So why is the demand of cash remaining robust or even increasing (e.g. South Korea, Mexico, Singapore)?

  • Cash is both used as means of payment and as a store of value (SoV), however, over the last decade, the demand for large-denomination notes has outpaced that for smaller denominations. In short, cash is increasingly seen as a store of value driven by ‘older’ generations less likely to use electronic means of payments as well as low interest rates diminishing opportunity cost

Government, banks and cards provider dislike cash meanwhile consumers see value

  • Meanwhile governments, banks and cards are doing everything they can to move towards a cashless society in order to ensure (i) less bank runs (no cash = no bank run), (ii) less larger notes = impact on black economy (iii) less cash = more smaller payment = more transaction fees and data for bank / card providers

  • But consumers may prefer cash as (i) easier to monitor spending, (ii) cash is money in many cultures (e.g. Switzerland) and (iii) purchases remain anonymous. In addition, there is also some stigma from past bank runs where people would not be able to withdraw their own money (see recent bank runs in Cyprus or UK)

  • Cash is unlikely to disappear in most parts of the world. Though the definition of cash, ie. coins and notes, may evolve to something else driven by a generational shift. The $100bn+ questions include: Will Bitcoin replace cash? When will it appear? Will something else appear e.g. Libra?

What’s next for the Western world? Look at India and China and you will have some answers.

  • China: PBoC’s intention is to have cash replaced by a central bank-issued digital currency. The aim is to support the Yuan’s circulation and internationalisation. Meanwhile, 75% of the population prefer digital payments thanks to mobile wallet and QR code. On the other hand, China has a love-and-hate relationship with Bitcoin. One day is ban. The other is not.

  • India: The government declared in 2016 that 1,000 and 500 Rupee notes would no longer be valid despite strong resistance to change and temporary cash shortage. As a consequence, the number of taxpayers increased but illegal money was not uncovered. Moreover, a recent report by Harvard and IMF researchers showed the cash shortage caused by demonetisation generated a decline in national economic activity of roughly three percentage points or more in November and December 2016.

What’s your thoughts on the future of cash?

🐦 Tweets of the week

The team at Skew recently pointed out that LMAX has been consistently growing over the past 12 months, driven by their institutional graded infrastructure and institutional clients…

One of the most important news of last week is Stone Ridge interval Bitcoin securing SEC approval to create its Bitcoin Futures Fund. More products will make it easier for a proper Bitcoin ETF - not sure about timeline, more something in the 2-5 years…

🤹 Startups News

  • Kusama has officially been released into the wild. Network governance is now decentralized and permissionless, and transfers are now live LINK

  • Bitcoin mining giant Bitfury is now in the business of enterprise blockchain with the launch of Exonum Enterprise, the first blockchain built to let large corporations streamline their business and increase transparency using the Bitcoin blockchain LINK

  • San Francisco-based cryptocurrency exchange Kraken is adding support for its latest fiat asset, the Swiss franc (CHF) LINK

  • Gemini hired a former senior executive from United Kingdom-based Starling Bank LINK

  • Congrats to Brave Browser passing 10m monthly active users, tripled their daily active users in the last 12 months, and their Verified creators have grown 12x over 2019 Link

🎁 Startups Product & Partnership

  • Leveraging Lightning, Bitfinex Users Can Now Shop at Bitrefill to buy a wide range of gift cards or to top up their prepaid phone credit LINK

  • Sibex, the Zug-based provider of a decentralized cryptocurrency-trading platform, has teamed up with stablecoin issuer Paxos to facilitate peer-to-peer OTC trading using its bullion-backed crypto asset (Pax Gold) LINK


  • Germany’s second-largest stock exchange, Boerse Stuttgart Group, has gone live in full capacity with its trading venue for digital assets. The newly launched Boerse Stuttgart Digital Exchange (BSDEX) is available to all users in Germany and also for residents in the European Economic Area (EEA) LINK

  • WisdomTree Investments, with $60 billion in client assets, launched a Bitcoin exchange-traded product. The ETP is listed on Swiss stock exchange SIX LINK

  • Deutsche Bank has published "Imagine 2030 — the decade ahead" – an 80-page research report with predictions how the 2020s may evolve. What’s intriguing is that the first chapter is called ‘The end of fiat money?’ and another chapter is about Cryptocurrency (not Bitcoin but more central bank digital asset) LINK - I would recommend to take 5-10mn to read through the research paper pretty well written

Eventually, it is possible that inflation will become more and more embedded in our system and doubts will rise about the sustainability of fiat money. The demand for alternative currencies will therefore likely be significantly higher by the time 2030 rolls around. Will fiat currencies survive the policy dilemma that authorities will experience as they try to balance higher yields with record levels of debt? That’s the multi-trillion dollar (or bitcoin) question for the decade ahead.

🏦Regulations / Universities

  • A Danish court ruled that Nordea Bank has the right to prevent its employees from investing in Bitcoin LINK

Copenhagen-based court ruled that “Cryptocurrency is risky, and the risks justify the restriction.” In response to this, Denmark’s Union for Financial Industry Employees said “We filed suit because of the principal that everyone obviously has a private life and the right to act as a private individual.” The bank’s position is that investing in Bitcoin may damage the employer’s reputation. Thus, owning Bitcoin is a breach of etiquette for Nordea Bank employees.

  • The EU’s AML directive comes into law this January. EU states must decide how to implement the directive as it pertains to cryptocurrency. The Dutch Ministry of Finance (FIN) and Dutch National Bank (DNB) have laid out their own interpretation. Critics say they could do irreparable damage to the young crypto industry LINK

  • The Ukranian government has approved the final version of a money laundering law that will handle virtual assets and virtual asset service providers (VASPs) per FATF guidelines LINK

One of the guidelines focuses on individual crypto transactions worth less than 30,000 hriven ($1,300), from which the government will only collect the public key of the sender for the purpose of financial monitoring. 

Everyone is talking about San Francisco as the epicentre of everything in crypto. Well, I wanted to shed light on Europe and show how exciting the ecosystem is.

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